Net mortgage approvals for house purchases, an indicator of future borrowing, increased by 900 to 64,200 in June, according to the latest Money and Credit statistics from the Bank of England.
Approvals for remortgaging with a different lender also increased, by 200, to 41,800 in June. This marked the highest number of approvals for remortgaging since October 2022 (50,000).
Net residential mortgage borrowing increased by £3.1 billion to £5.3 billion in June, compared to a £2.8 billion increase of net borrowing to £2.2 billion in May. The annual growth rate for net mortgage lending rose from 2.6% to 2.8% in June. Gross lending increased to £23.9 billion in June, from £20.6 billion in May. Gross repayments also rose in June, to £18.8 billion, from £17.6 billion.
The average interest rate on newly drawn mortgages decreased for the fourth consecutive month, to 4.34% in June from 4.47% in May. However, the rate on the outstanding stock of mortgages increased slightly, to 3.88% from 3.87%.
Karim Haji, Global and UK head of financial services at KPMG, commented: “June’s rise in mortgage approvals and remortgaging activity reflects growing borrower confidence amid increasing competition between lenders. Despite lingering cost-of-living pressures, more households are re-entering the market, either to secure better remortgage deals or take advantage of slightly improved affordability conditions."
Richard Donnell, executive director at Zoopla, said: "Demand for mortgages to buy homes increased in June as stable mortgage rates and changes to mortgage affordability encouraged more buyers agree home purchases. Zoopla data shows unusually high levels of housing market activity for the early summer with sales agreed up 8% on last year and 11% more buyers in the market. While activity levels are higher this isn't feeding into house price inflation which is slowing. We expect increased housing activity to support demand for mortgages in the rest of the year."
Nathan Emerson, CEO of Propertymark, added: “This is a positive sign at a time when there is a poor economic outlook in general and potential tax rises on the way.
“The Chancellor’s recent Leeds Reforms sent a positive signal to the mortgage market, which should encourage many lenders to focus new products and services towards those on lower incomes to help them take their first step onto the housing ladder.”
